The Soviet Defence Burden and Arms Control

Abstract

Poor economic performance m the Soviet Union has led to a view in the West that Soviet leaders might seek an accommodation with the US which would allow them to transfer resources to the civilian economy. The economy has been characterized by declining growth in population, capital and produc tivity. Economic evidence suggests that defence priority has adversely affected economic performance by attracting a disproportionate share of resources and, in protecting military producers from the worst aspects of central planning, by imposing the systemic burden on the civilian economy. Econometric investigation by Western economists shows that the benefit in terms of higher economic growth from substantial decline in the growth of military expenditures is quite small, due to the inefficiency of the civilian investment process. An arms limitation is unlikely to yield a substantial transfer of R & D resources. A more fruitful source of economic benefit is likely to be the relaxation of restrictions on civilian enterprise. The military view of economic reform is likely to be ambivalent. It recognizes the need for a strong modern economy but is probably reluctant to yield its priority status. The international sector offers little prospect of relief. The East Europeans have their own economic problems and the Reagan administration has tightened its control on exports of technology which might at the margin ease the Soviet economic constraint. The resource saving from an arms agreement alone is unlikely to be sufficient to avoid the need for a fundamental re-assessment of policies.